BMO Earnings Top Estimates on US Business, Capital Markets

Article content(Bloomberg) — Bank of Montreal topped estimates on stronger-than-expected performance both at its US operations as it pushes to improve results at the business and at its capital-markets unit, which benefited from strong trading.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentThe Toronto-based lender earned C$3.48 a share on an adjusted basis in its fiscal first quarter, according to a statement Wednesday, more than analysts’ C$3.22 average estimate.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentAdjusted net income at the company’s US banking business totaled C$802 million ($585 million) in the three months through January, better than the C$790 million average forecast of four analysts in a Bloomberg survey and up from the C$707 million it earned a year earlier. At the company’s capital-markets unit, adjusted net income totaled C$660 million, topping the C$523 million average forecast. Article contentArticle contentThe bank saw “record revenue in each of our operating segments, strong fee growth in our market driven businesses and margin expansion in our Canadian and US banking businesses,” Chief Executive Officer Darryl White said on a call with analysts.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentOverall net income totaled C$2.49 billion in the quarter, up 16% from a year earlier. The bank’s shares gained 3.2% to C$201.35 at 9:47 a.m. in Toronto. They’ve climbed 38% in the past year.Article contentBank of Montreal has been focused on rebuilding its return on equity and has pledged to improve profitability at its US division in particular. It’s been trimming costs companywide to aid in those efforts and recorded C$202 million pretax for severance costs in the first quarter.Article contentAdjusted ROE came in at 12.4% in the first quarter for the bank as a whole, while in the US that figure hit 8.5%.Article contentOver the past four quarters the firm has been divesting some of its less lucrative loan portfolios in the US, and executives said Wednesday it’s about 90% done with that process. Having now decreased US loan balances by about 5%, management predicted the bank would soon see lending accelerate. Article contentArticle contentOn credit, Bank of Montreal recorded C$746 million in provisions for possible loan losses, less than the C$807 million analysts had forecast.Article contentWhile the credit picture overall was positive, management noted that the macroeconomic picture in Canada is more uncertain than in the US. Bank of Montreal is seeing some stress among Canadian consumers, particularly at the “lower end of the market,” said Mat Mehrotra, group head of Canadian personal and business banking.Article contentThe company’s results were “well ahead of expectations” even with the headwind of severance costs, wrote Jefferies Financial Group Inc. analyst John Aiken in a note to clients. Article contentLower-than-forecast provisions for credit losses and a strong boost in trading also helped, he said, “but we believe that investors should focus on the underlying performance strength that included margin expansion on both sides of the border and efficiency gains.” Article content(Updates with comments from earnings call, shares starting in fourth paragraph.)Article contentTrending Canada's housing market suffers largest price decline among major economies, says BIS Real Estate Posthaste: Canadian dollar is facing a big risk that markets seem to be overlooking News B.C. widow worried about retirement income with OAS clawbacks Family Finance Australia ships LNG 25,000 kilometres to Eastern Canada amid Asian slump Oil & Gas New cross-border U.S. pipeline proposal could revive idle Keystone XL assets: analysts Oil & Gas Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Canada's housing market suffers largest price decline among major economies, says BIS Real Estate Posthaste: Canadian dollar is facing a big risk that markets seem to be overlooking News B.C. widow worried about retirement income with OAS clawbacks Family Finance Australia ships LNG 25,000 kilometres to Eastern Canada amid Asian slump Oil & Gas New cross-border U.S. pipeline proposal could revive idle Keystone XL assets: analysts Oil & Gas